Consumer bankruptcies

Consumer bankruptcies in the United States are projected to increase by 8.9% in 2025, reaching an estimated 538,170 cases. This rise is driven by persistent inflation and high interest rates, which strain household budgets and complicate debt repayment. The expiration of pandemic-era relief programs has left many without financial buffers, while record-high household debt of $17.95 trillion and growing credit card balances add financial stress. Broader post-pandemic shifts in consumer spending and rising labor costs in sectors like casual dining further erode financial stability.

Over the five years to 2025, consumer bankruptcies have experienced significant declines and recent resurgence, influenced by evolving macroeconomic and policy conditions. Sharp decreases in 2021 and 2022 were due to government stimulus and relief measures in response to COVID-19, with filings dropping 23.6% in 2021 and another 6.3% in 2022. These interventions provided temporary financial cushions. However, 2023 and 2024 saw a reversal, with filings rising by 16.0% and 13.9%, respectively, driven by rapid interest rate increases that raised borrowing costs and persistent inflation that elevated living costs. The end of relief programs, high household debt, and resumed student loan repayments in late 2023 further heightened consumer financial stress, reflected in rising delinquency rates.

Legal and social dynamics have continued to influence this period. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, making filing more complex and costly, acted as a deterrent but was repeatedly outweighed by macroeconomic distress. Regional disparities, including differences in legal culture and local economic conditions, remained relevant, affecting bankruptcy rates nationwide.

By the end of this period, high household debt levels, elevated interest rates, inflationary pressures, and depleted consumer savings have contributed to more personal bankruptcies despite post-pandemic economic growth. The interplay between policy support, macroeconomic trends, and household financial resilience has shaped the fluctuations in consumer bankruptcy filings over these five years.